The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket
A) change; underestimates B) do not change; overestimates
C) change; overestimates D) do not change; underestimates
C
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The Federal Reserve System is an
A. agency run by popularly elected officials. B. agency that is under the direction of the president. C. agency that is controlled by Congress. D. independent agency of government.
Which is NOT a weakness of the policy of mandatory separation of recyclables?
A) It actually pays people to use more recyclable material, and thus more material in total. B) It is costly for households in terms of time spent. C) It is costly for the government to monitor. D) Individuals may shift away from recyclable to non-recyclable materials just so they don't have to bother to separate them. E) Implementation is difficult and consumes household space.
Which of the following coordinates the choices of buyers and sellers, bringing quantity demanded and quantity supplied into balance?
a. government mandates b. the market price c. taxes and subsidies d. consumer demand
If the quantity of tea demanded increases by 2% when the price of coffee increases by 6%, the cross-price elasticity of demand between tea and coffee is
A. -3. B. 0.33. C. 3. D. 12.